Reliance Industries Ltd’s (RIL) production of coal-bed methane (CBM) at the Sohagpur West CBM Block in Madhya Pradesh State has fallen short of its targets owing to operational issues and poor pipeline connectivity, the Indian Ministry of Petroleum and Natural Gas has revealed in its latest monthly production report.
Sohagpur’s output slipped to 940,000 mcm per day in July-September from 1 mcm per day in April-June. “Under-performance of CBM wells and the constraint imposed on CBM off-take from September 22” were the key reasons for Sohagpur’s lower output, the ministry said.
Financial daily The Economic Times quoted sources as saying that heavy water yields had affected quarterly production, though the decline has now been arrested. They added that the company had undertaken a dewatering process to ramp up output, but noted that the process typically took “18-36 months”.
While RIL sells the CBM production to its petrochemical facilities in Gujarat and Maharashtra, it does not yet have the infrastructure to pump the gas directly to its plants.
Instead, it has arranged for state-owned GAIL (India) to pipe the CBM to fertiliser-maker IFFCO in exchange for deliveries of imported LNG to its petrochemical facilities. Fluctuations in IFFCO’s demand, however, have limited RIL’s production volumes.
The Economic Times’ sources, however, said that once more customers joined the pipeline, RIL intended to drill new wells and build additional infrastructure to step up its CBM output. A major boost should happen when RIL has a pipeline that runs directly to the country’s western states.
Despite RIL’s constraints, the company can be upbeat over the fact that the country’s CBM policy model has finally been streamlined. In March 2017, New Delhi approved pricing and marketing freedom for CBM production. In August, the government allowed any hydrocarbon resource to be develop under an existing licence.
Several players including RIL, Essar, Great Eastern Energy Corporation Ltd (GEECL), Oil and Natural Gas Corp. (ONGC) and Coal India Ltd (CIL) are now anticipated to up their investment in CBM. Conventional oil and gas developers such as Vedanta are also now looking to take advantage of the Hydrocarbon Exploration and Licensing Policy’s (HELP) uniform licensing approach by exploring for CBM and shale gas.